Mineral royalty tax increase makes no sense – HH

UPND President Hakainde Hichilema says the move by Government to increase mineral royalty tax in the 2015 national budget was not a sensible approach and is negatively impacting investment prospects.

Mr Hichilema in his weekly policy Issue statement obtained by QFM News notes that if the increase mineral royalty tax lead to mine closure and delays of planned investment then it will actually have an impact of reducing total revenues and the number of jobs, a situation in which no one benefits.

He explains that this is because no two mines have the same cost structure of production even if they had the same level of production or revenues.

Mr Hichilema states that the focus on increasing royalty rates is misdirected as the problem the country has faced with revenues to date are largely due to collection of what is owed.

He says the solution is not to increase the tax but rather to ensure that all taxes owed are properly recorded and collected, and that further investment is also facilitated so that revenues and jobs can both increase, and not one at the expense of the other.

He questions what use is increasing the level of tax if there is no proper collection of the existing amount.

The UPND Leader adds that Government can also help secure greater benefits for Zambians through supporting local businesses to participate in the industry and both drive and benefit from economic growth.

Mr Hichilema says job creation and stimulation of local economies and enterprises are activities that can directly benefit the people.

He has since proposed and advised President Edgar Lungu and the PF Government to ensure they collect what is owed under the current mining tax system before changing the taxation system.

Mr Hichilema has also advised government consult widely and be transparent in developing policy, and also ensure that ministers and State House are in agreement over a policy before it is announced to avoid U-turns only a few weeks later.

He says policy consistency is essential for industry growth and industry growth will naturally deliver greater revenues, as well as creating much needed jobs and opportunities for local businesses which directly benefit the Zambian people.